Investors interested in Transportation - Services stocks are likely familiar with XPO Logistics (XPO - Free Report) and DSV A/S UNS ADR (DSDVY - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, XPO Logistics has a Zacks Rank of #2 (Buy), while DSV A/S UNS ADR has a Zacks Rank of #4 (Sell). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that XPO is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
XPO currently has a forward P/E ratio of 17.92, while DSDVY has a forward P/E of 27.75. We also note that XPO has a PEG ratio of 0.58. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. DSDVY currently has a PEG ratio of 1.78.
Another notable valuation metric for XPO is its P/B ratio of 2.19. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, DSDVY has a P/B of 7.95.
Based on these metrics and many more, XPO holds a Value grade of A, while DSDVY has a Value grade of D.
XPO is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that XPO is likely the superior value option right now.